Foreign direct investment in LDC: some empirical evidences

Abstract

Extrnal direct investment flows in Less Developed Countries (LDC) have registered an important growth in the last decades. They seem to be a sounder way of getting external financing far LDCs than commercial loans. The present study is an attempt to carry out sorne research on the determinants of Foreign Direct lnvestment (FDI) in LDCs of Latin America. Firstly, some ideas are stated about the convenience of FDI far LDCs, together with the theoretical background to the different hypotheses that aim to explain the FDI ftows to LDCs. The paper presents and describes also a formalized model, designed to test the validity of these hypotheses. The study finishes with somme empirical results, obtained from a cross country analysis out of a sample of Latin American countries.